Nightmare Buying House

 If you’re the average Malaysian thinking of buying a house, maybe you should wake up to reality.

Even if you can get a loan for a cheap version of your dream home, you’re likely to end up with a nightmare that may last 30 years, according to a veteran property consultant.

In an interview with FMT, chartered surveyor Ernest Cheong said Malaysians earning average incomes simply could not afford a housing loan because salaries were not rising in tandem with the cost of living.

He speculated that more young Malaysians would stay with their parents for a longer period than did previous generations.

“When I first started work in 1966 as a lab assistant, I earned RM500 a month,” he said. “I could afford a brand new Mini Minor for RM4,500 and pay the instalments of RM130 a month.

“Back then, a plate of noodles or chicken rice cost 30 sen.”

Nowadays, he pointed out, the same job for a fresh graduate would pay up to RM2,500. That’s a five-fold increase from 1966, but to buy the cheapest new car on the market you’d have to fork out about five times the price you’d pay for a Mini back then. And the price of a plate of noodles or chicken rice? It has jumped 16 times.

Cheong said the current cost of an average house was beyond the reach of many working class people. If a house costs RM500,000, the monthly repayment is around RM2,500 for a 30-year 90% loan at 6% interest.

“EPF statistics show that 89% of Malaysians earn less than RM5,000 a month,” Cheong said. “So RM2,500 for a monthly repayment is a lot for most Malaysians. “Furthermore, it’s not easy for people to secure housing loans nowadays. Even assuming a person gets a 90% loan, coming up with the remaining 10% down payment would be challenging.”

But Cheong noted that Malaysians weren’t the only people who couldn’t afford their own homes. Apparently, people in Japan, South Korea, Hong Kong, Australia and the United States are suffering the same fate.

Last December, CBS News said 40% of young adult Americans were living with their parents. A Bloomberg report last year noted a 2012 research that showed almost half of single Japanese adults aged 20 to 34 lived with their parents.

“Salaries just aren’t going up fast enough,” Cheong said. “People nowadays must really be prepared to face the fact they might not be able to afford their own home or they must lower their expectations drastically.”